'Bid At Your Own Risk': Yukon Court Of Appeal In Mega Reporting Upholds Waiver Of Liability In Government Procurement Process

In a recent Yukon Court of Appeal decision, Mega Reporting, the Court unanimously upheld a waiver of liability clause in the Yukon government's Request for Proposals ("RFP") process challenged by an unsuccessful bidder.

In the result, where sophisticated business parties enter into a bidding process on terms that include a waiver of liability, they have agreed to a contract that excludes remedies for a breach of its rules. It is not open to the courts to interfere with exclusion clauses in RFPs on public policy grounds, as the public interest in a fair bidding process does not override the strong public interest in the enforcement of contracts.

Background

In 2013, the Yukon government issued an RFP seeking bids for a one-year contract for court transcription services. The tendering process had two stages: (1) a technical evaluation of the bidder's experience and performance; and (2) an assessment of the price for each bid that met the minimum technical criteria.

The evaluation committee determined that Mega Reporting Inc. ("Mega") did not pass the first stage, so it did not consider its (lower) bid price. Another bidder was selected. Mega met with government officials to receive feedback on its bid and learned that it lost points for criteria not disclosed in the RFP. There was also no evidentiary record of the evaluation. Mega sued the government, alleging that it breached its duty to fairly review its proposal.

The RFP explicitly provided that the process was subject to the Yukon Contracting and Procurement Regulation (the "Regulation") and the Contracting and Procurement Directive (the "Directive"). The Directive sets out various principles for public procurement, including commitments to fairness, openness, transparency, and accountability. However, the RFP also included a clause purporting to waive the government's liability for any costs associated with unfairness in the RFP process, except as awarded through a Bid Challenge Process.

The central question before the court: Could the government contract out of the duty of fairness through a waiver of liability clause, or is such an exclusion clause unenforceable as being contrary to public policy?

Yukon Supreme Court Decision

Justice Bielby of the Yukon Supreme Court ruled in favour of Mega, refusing to enforce the waiver of liability clause in the RFP process. She held that the government failed to meet its duties of fairness, accountability, and transparency, both at common law and...